World gold price movements last week
Gold prices experienced another week of strong fluctuations as persistent instability in the Middle East only created limited safe haven support. Meanwhile, more positive US labor data, increased Treasury bond yields and concerns that the US Federal Reserve (Fed) would resume interest rate hikes dragged the precious metal down sharply in Friday's session.
Spot gold prices started the week at 4,539.42 USD/ounce on Sunday evening. This precious metal at one point edged up as traders reacted to new uncertainties related to Iran and the Strait of Hormuz.
However, the rapid increase slowed down after information showed that Tehran was withdrawing from negotiations, causing oil prices, treasury bond yields and the USD to rise together. Gold prices then set a weekly high of 4,545.55 USD/ounce on Monday, before the selling side gained the upper hand.
On Tuesday, gold prices tried to stabilize thanks to cautious optimism surrounding the partial ceasefire agreement between Israel and Hezbollah. However, the recovery momentum faded below the 4,550 USD/ounce threshold after JOLTS data in April showed that the number of vacant jobs increased to 7.6 million, strengthening expectations that the Fed has few reasons to ease policy.
Pressure continued to extend to Wednesday, as the ADP report showed that the labor market remained stable, pushing inflated yields sensitive to monetary policy higher and causing gold prices to continue to be under pressure.
This precious metal found some support on Thursday, as Treasury bond yields and the USD weakened amid new expectations of a possible cooldown in regional tensions on a wider scale, along with progress towards reopening the Strait of Hormuz. However, the US May jobs report, stronger than expected, released on Friday reversed this development.
The number of non-farm jobs in the US increased by 172,000, causing concerns about rising interest rates to return strongly. After job data, gold prices broke down a clear downward trend and set a weekly low of 4,311.93 USD/ounce on Friday afternoon, as the sell-off wave accelerated. Precious metals only recovered slightly from the bottom before entering the closing time.
Gold price forecast for next week
The latest survey shows that Wall Street analysts strongly lean towards a negative scenario for gold prices next week.
This week, 15 analysts participated in a gold survey by Kitco News. The results showed that Wall Street sentiment has reversed from a state where up to 3/4 of experts predicted price increases to 3/4 of experts predicted price decreases, after gold prices failed to maintain an important support zone.
Only 2 experts, equivalent to 13%, expect gold prices to increase next week, while 11 others, accounting for 74%, predict prices will decrease. The remaining 2 experts, equivalent to 13%, believe that gold prices will move sideways, accumulating next week.
Meanwhile, Kitco's online poll recorded 49 votes. The group of individual investors became more pessimistic after the latest drop in gold prices.
There are 23 individual traders, equivalent to 47%, expecting gold prices to increase next week, while 18 people, accounting for 37%, forecast that this precious metal will continue to depreciate. The remaining 8 investors, equivalent to 16%, said that gold prices will remain flat next week.
Notable economic data for next week
After a week of the market focusing almost entirely on job data, next week will witness a series of important inflation indicators, which may help investors further strengthen expectations that are increasingly leaning towards a tougher interest rate policy.
The economic calendar will begin on Tuesday morning with a report on existing home sales in the US in May. By Wednesday, traders will be watching the US consumer price index (CPI), along with the monetary policy decision of the Bank of Canada, in the context that the market is assessing the agency's ability to keep interest rates unchanged.
On Thursday morning, the European Central Bank (ECB) will announce its monetary policy decision. Traders currently assess the possibility of the ECB raising interest rates in this meeting as quite high. After that, the market will continue to receive the US producer price index (PPI) and the number of weekly jobless claims.
The week's economic data series will close on Friday morning with a preliminary survey of consumer sentiment in June by the University of Michigan.
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